Hi Doriemus I've been a RHI shareholder for years and reduced...

Hi Doriemus
I've been a RHI shareholder for years and reduced and topped up at various stages. I bought into the rights issue plus oversubscribed; and then when the AQA takeover was proposed I bought more, so I am confident of value. If one were to simply convert the net Iron Ore tons attributable to RHI to market value at say $5pt one would easily get a market value of around $500+m. Not bad for a company with a current market cap of $84m. But the key value proposition is that the terms of their participation in the RHIJV state they are carried for their fully diluted 20% interest through to first ore shipment then can repay from revenues. That is a truly valuable structure because there will be no dilution of equity to participate in the project. Value could ultimately be a multiple of the straight sale copnversion above imo. Of course apart from the participation in the WPIOP, RHI also has a substantial 100% owned Iron Ore reserve of its own in the Pannawonica project which could benefit from railway access. There's a great story to tell behind this company but stock is hard to buy.

My expectation which is gained from observation of the continual buying activity of the directors (Pitt and Tomkinson) over the last 5-6 years is that they will stay on for the ride and not sell out because that is how they will become very wealthy indeed. Their current ownership is around 26+%. From the last annual report, AQA is listed with 20% and Brisbane investments which is I believe the AMCI (other WPIOP partner) holding 8.2% and Acorn Investments with 6.5%. Acorn is a fund manager which is often engaged by large super funds as a sub-manager of situation stocks. Total major shareholders account for 60+%.

RHI is imo a buy and hold stock for medium term capital gain. Do as the directors do and you will not go too far wrong imho.

regards
DF